Air turbulence over BAE merger

PARIS, FRANCE: Britain, France and Germany have resumed talks to try to prevent a disagreement over state shareholdings wrecking a proposed merger of EADS and BAE Systems.

With just over two days until a 1600 GMT Wednesday deadline set by the UK, the aim is to make sufficient progress over the central issue dogging the talks to allow BAE Chief Executive Ian King and Tom Enders of Franco-German EADS to seek an extension.

BAE's top investor questioned the very rationale of the $45 billion deal.

Plans by Airbus parent EADS and UK arms firm BAE Systems to create the world's largest aerospace and defense company must overcome a knot of political concerns over security and jobs.

"If they can get the central issue of shareholding resolved, then there'll probably be some more time to tie up other issues like headquarters, weights on the board and other matters," said a senior diplomat following the negotiations.